Tyco shares bounce in pre-open

McData down on revenue warning; Novell surges

By

EmilyChurch

LONDON (CBS.MW) - U.S. stock futures were mixed in speculative pre-open trading on Tuesday as choppy European trading sent mixed signals.

Shares of Cisco Systems were building on gains a day ahead of the networking leader's quarterly results, while McData was pressured after a disappointing pre-open announcement. Tyco managed to turn higher, and Novell soared after saying IBM planned to take a stake in the company.

The S&P 500 tracker
SPY, +0.03%
edged up 2 cents to $106.01 but the Nasdaq 100s tracker
QQQ, -0.45%
was last down 6 cents at $35.70.

Storage stock McData Corp.
MCDTMCDTA
dropped 78 cents, or 7.8 percent, to $9.25 in pre-open trading after warning on its third quarter sales. It failed to reach an agreement on the timing of orders from EMC
EMC, -1.87%
one of its largest customers.

The ever-newsworthy Tyco
TYC, +74.50%
initially fell, but recovered to trade up 48 cents, or 2.3 percent, to $21.50 after the group set plans to reduce its workforce by 7,200 employees as part of a restructuring that will include the consolidation of 219 facilities.

For 2004, the conglomerate is projecting earnings of $1.42 to $1.52 a share vs. analyst forecasts of $1.52.

Shares of Novell
NOVL
soared $1.48, or 24 percent, to $7.53 in pre-open trading after the software company said IBM
IBM, +0.11%
intends to make a $50 million investment in convertible preferred Novell stock.

Separately, Novell announced an agreement to buy Suse Linux for $210 million in cash. Novell added that it was currently in discussion with IBM regarding the extension of commercial agreements, in which IBM continues to support Suse Linux on IBM's server products.

Also ahead of the open, Gillette
G, +0.45%
rose $1.09 to $33.59 after quarterly profits topped estimates amid strength in its core franchises, especially blades and razors and Duracell batteries. Sales rose 11 percent in the latest three months to $2.41 billion.

Cisco ahead, market trend unclear

Cisco topped a 22-month high of $21.61 in intraday trading Monday. The stock had gained 8.9 percent since the Oct. 24 close. The broker comment ahead of Cisco numbers continued overnight.

Merrill Lynch told clients it was looking for a "solid quarter" from Cisco, adding "we do not expect the U.S. enterprise market to show signs of material improvement, but believe that demand with service providers will be strong."

Analysts surveyed by Reuters Research are anticipating earnings of 15 cents a share and revenue of $4.85 billion, on average.

Among other tech stocks, Microsoft
MSFT, -0.71%
and Sun Microsystems
SUNW, -5.45%
were down 12 cents and 5 cents, respectively, at $26.56 and $4.34.

The euro was holding below $1.15 after U.S. ISM data Monday triggered a dollar rally. The dollar was at 110.37 yen.

"Although we continue to believe HP faces long-term challenges in competing against IBM
IBM, +0.11%
and Dell
DELL
we have become less concerned over certain fundamental risks in the story." The broker said it was anticipating a steady economic improvement in 2004 "bodes well for IT spending, and these improvements should counter some of HP's competitive pressures." Shares were around $23 in Frankfurt, up around 30 cents.

Wall Street banks may see some attention after Credit Suisse Group
CSR, +14.10%
the second largest bank in Switzerland and an investment banking competitor in the U.S., posted a drop in trading profits over the third quarter as fixed income revenue declined.

CS attributed the decline to its decision to take conservative risk positioning in fixed income in the face of interest rate volatility in the U.S. Shares dropped 3.4 percent in European trading. See more on CS Group

Elsewhere, Pinault-Printemps-Redoute dropped 4.2 percent in Paris after Gucci Group
GUC
said Domenico De Sole, president and chief executive, and Tom Ford, creative director of Gucci Group and the Gucci and Yves Saint Laurent brands, do not intend to extend their contracts beyond their currently scheduled expiration date in 2004. PPR has an option to buy Gucci outright in April.

In London, satellite broadcaster BSkyB (BSY) eased 0.9 percent, trimming some of Monday's rally, as Rupert Murdoch's son James took over as chief executive despite institutional investor concerns.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.